Arizona Attorney General Kris Mayes has filed criminal charges against Kalshi, a popular prediction market platform. The accusation against Kalshi is that it allows illegal gambling, according to a report by The Guardian.
This is the first time a state has opted for criminal charges against Kalshi. The platform has faced growing calls for regulation, and is now being blamed for accepting bets on political results, college sports and player performances.
According to The Associated Press, this violates Arizona’s gambling laws that strictly prohibit managing unlicensed betting, especially in politics.
Mayes stated, “Arizona will not be bullied into letting any company place itself above state law.”
Kalshi is NOT a gambling company. Saying so is incorrect.
I assume that people calling Kalshi “gambling” are uninformed, rather than being defamatory, but
Kalshi is not “gaming.” It’s been decided in the courts. Please read the 15 pages of KalshiEx LLC v. CFTC (2024) before… https://t.co/GbAqFUz4QM
— Benjamin Freeman (@benwfreeman1) December 4, 2025
CNN reported that Mayes also issued a statement claiming, “Kalshi may brand itself as a ‘prediction market,’ but what it’s actually doing is running an illegal gambling operation and taking bets on Arizona elections, both of which violate Arizona law. No company gets to decide for itself which laws to follow.”
The use of prediction markets became popular very recently. Dune Analytics reportedly revealed that traders even spend $5 billion a week on places like Kalshi and Polymarket.
Kalshi’s spokesperson Elisabeth Diana told CNN that prediction markets can only be regulated by the federal government, not by the state.
Diana said, “States like Arizona want to individually regulate a nationwide financial exchange, and are trying every trick in the book to do it.” She further clarified that Kalshi is “different from what sportsbooks and casinos offer,” which is why it “should not be overseen by a patchwork of inconsistent state laws.”
As Reuters pointed out, Kalshi had argued that it falls under the Commodity Futures Trading Commission’s jurisdiction.
Apart from that, President Donald Trump’s administration has supported Kalshi, which gave rise to the state vs federal narrative, reports The Associated Press.
Trump’s eldest son, Donald Trump Jr., is also associated with the company as their strategic adviser. Reports suggest that Truth Social, Trump’s social media platform, is planning to open its own cryptocurrency-based prediction company called Truth Predict.
🚨#BREAKING: Kalshi is now facing a nationwide class action lawsuit alleging it is operating an illegal sports betting operation by misleading users into believing they are betting against other participants, when in reality they are betting against the company itself. pic.twitter.com/2lVJLMXnV7
— R A W S A L E R T S (@rawsalerts) November 27, 2025
As a step to stop any state actions against them, Kalshi had sued Arizona, Utah, and Iowa. However, Arizona’s U.S. District Judge Michael Liburdi denied any request for a temporary block. He also challenged Kalshi’s request and asked them to prove why the case belongs in federal court.
Nine other states had reportedly taken some form of legal action against the company. According to reports by The Guardian, prosecutors also alleged that Kalshi accepted bets on the 2028 presidential election.
